Whether a crypto project adopts the DAO model or not, first consider these 8 factors

As more and more companies seek to innovate in their management and organizational strategies, we are seeing a growing interest in DAOs that are also having a huge impact on people’s digital lives. However, not every project is a good fit for the DAO model, and here are 8 key points to consider before making the right choice:

1, DAOs are not recommended for centralized services and large-scale projects

DAOs are an attractive alternative to traditional enterprise management models for Web3 startups, but if your project is large and needs to provide centralized services, then DAOs are not a good fit. Once you’ve adopted the DAO model, you’ll need to manage hundreds or thousands of shared decisions, and just communicating and coordinating can take a lot of effort and cost.

In addition, low turnout is also a headache, although technology can simplify the voting process and speed up voting, but it cannot completely solve the problem of low turnout, and off-chain voting takes a long time to finally approve the proposal, which is not suitable for large projects and projects that provide centralized services. On top of that, even if you’re starting out as a small project, you’ll grow in size over time, so adopting DAO governance also needs to consider the scalability challenges of the project, which is critical to determining the mission and goals of the project, and determining if the DAO is the right choice.

2. Clarify the overall needs of the team and the project

Every DAO needs a strong core team to build smart contracts, and whether you need to start a team or gather a group of friends, ask yourself if everyone on your team is passionate about the task. The team fully discussed why DAOs are needed and validated the needs of the project and its community, and discussed how DAOs can be used to encourage community formation rather than relying on centralized governance models.

Disagreements between team members are a red flag as this can affect the governance structure down the road, so choose DAO members who have similar perspectives but complementary skills – remember, even for development teams, there can be technical complexities and differences.

3. Trust is the foundation

In the DAO governance structure, you don’t see any “leadership”, because the DAO encourages collective ownership and collective autonomy, and all work, organizational rules rely on the voting of DAO Token holders, and decisions are also automated by smart contracts when predetermined criteria are met.

Before deciding whether or not to embed a project in blockchain technology and a smart contract trust layer, you must understand one thing – trust is the key to effectively managing a DAO, as any member can verify the DAO code, so you need to measure how to collaborate in a secure and transparent way.

4. Establish the right governance structure

Do you need to confirm if the community really wants to automate decisions with smart contracts, or if it still wants a traditional top-down, seniority- and leadership-based governance model?

To put it bluntly, many DAOs today still rely on “centralized decision-making” – where 1% of token holders actually own 90% of the decision-making power – which can discourage new members from joining the project. The core DAO team should identify key members and governance principles so that voting power is evenly distributed among the community, and in general, on-chain voting weight is usually based on what DAO members hold

Token

amount, while off-chain voting relies on tools such as Snapshot.

Whether it’s a one-person-one-vote, delegated vote, or weighted vote, the ultimate goal is to make it easier for each member to vote on and review proposals.

5. Determine community ownership and value standards

The process of joining a DAO can be time-consuming, and if you want to form a DAO, you determine how to scale the community and how to get new members on board and ensure that they have a voice in the DAO. There are three ways for DAO members to join:

Invite-only join

Automatically open to all token holders

Only applications will be accepted

Setting barriers to entry or requiring DAO members to contribute to the organization is critical for DAOs, so making it easy for any potential contributor to join and learn about the project, while also providing clear and complete rules and criteria is a surefire way to avoid future disputes — after all, decentralization doesn’t mean no friction.

6, Vault and

Token

economics

In a DAO,

Token

Uses typically include:

Reward members of the organization

Vote on proposals

Unlock more earnings

Token

It’s up to you whether it can be used to vote on the direction of your organization and provide added value and revenue opportunities. Design a high quality

Token

The economic model is very important, such as reasonable

Token

The release time ensures long-term support from investors, and it is not issued

Token

It can be used to incentivize long-term loyal DAO members. On the one hand, you need to make sure that you have enough reserves in the DAO treasury to achieve greater development goals, and on the other hand, you need to allocate them appropriately

Token

to motivate the community, there needs to be a balance between the two.

7. Transparency issues

Decentralization slows down decision-making, which is a problem for startups looking to move fast, so you should tell your DAO members how to process decisions quickly and which ones to vote on. Therefore, you need to form a community council or set different voting thresholds to ensure that the DAO follows the principles of decentralization and can quickly drive the scale of the organization. In this process, you need to maintain a high degree of transparency. The data is public, and you need to have a clear understanding of the native

Token

How it is assigned (despite the tracking.)

Token

Distribution is a lengthy process), and revenue metrics and financials are also published so that DAO members know all the truth when making decisions.

8. Think long-term

It’s not enough to just think about governance, collective ownership, trust, and scalability when building a DAO, you also need to explore community communication, new user outreach, and ongoing review of governance principles, especially as the DAO grows in size.

If you decide to adopt a DAO to manage your organization, it’s important not only to have a flexible, long-term vision, but also to take control measures decisively if necessary, while maintaining transparency among members and contributors.

In short, the above 8 points are essential for a DAO to be successful.